Delhi High Court Dismisses Petitions Seeking Quashing of Summons in Dishonored Cheque Cases - 2024-02-27

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Background:

Five separate petitions were filed under Section 482 of the Code of Criminal Procedure, 1973 ("Cr.P.C.") by the petitioner, who was impleaded as accused No.3 in complaint cases preferred under Section 138/141 NI Act by the respondent, seeking the quashing of proceedings emanating from five complaint cases pending before the learned MM (NI Act), North-West, Rohini Courts, Delhi.

The complaints alleged that the petitioner, along with other accused, being the Directors of a private limited company, had issued dishonored cheques to the respondent.

Legal Question:

Whether the petitioner, who resigned as a Director of the company before the issuance of the dishonored cheques, could be held vicariously liable under Section 141 of the NI Act.

Arguments Presented:

• The petitioner contended that she had resigned as a Director of the company on 15.03.2014, prior to the issuance of the cheques in question, and was not involved in the day-to-day affairs of the company at the relevant time.

• The respondent argued that the petitioner was an "Executive Director" and "Promoter" of the company at the relevant time and that she was responsible for the conduct of the business of the company.

Court's Analysis and Reasoning:

• The court observed that the petitioner was shown as an "Executive Director" and "Promoter" in the company during the relevant period and that the cheques were issued towards the outstanding amount prior to her resignation.

• The court held that the petitioner had not furnished any incontrovertible material or acceptable circumstances to substantiate her contention that she was not responsible for the day-to-day affairs of the company.

• The court further held that the issue of the petitioner's liability could only be resolved in the light of evidence led on record by the parties before the learned Trial Court.

Decision:

The court dismissed all the petitions, holding that they were not maintainable and that the issue of the petitioner's liability should be determined by the Trial Court on the basis of evidence.

Conclusion:

The Delhi High Court's decision highlights the importance of establishing vicarious liability in cases involving dishonored cheques under Section 141 of the NI Act. The court held that merely resigning as a Director of a company before the issuance of dishonored cheques is not sufficient to absolve an individual from liability if they were responsible for the conduct of the business of the company at the relevant time.